Essays on retail trading and credit cards

Mohr, Justin

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https://hdl.handle.net/2142/129561 Copy

Description

Title

Essays on retail trading and credit cards

Author(s)

Mohr, Justin

Issue Date

2025-04-23

Director of Research (if dissertation) or Advisor (if thesis)

Pennacchi, George

Doctoral Committee Chair(s)

Pennacchi, George

Committee Member(s)

• Kahn, Charlie
• Kiku, Dana
• Xu, Qiping
• Fonseca, Julia

Department of Study

Finance

Discipline

Finance

Degree Granting Institution

University of Illinois Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Keyword(s)

• Social media
• Investor activity
• Information
• Influencers
• Belief formation
• Payment Security
• Consumer Credit
• Fraud Risk
• Credit Card
• Lending
• Credit Information
• Household Finance

Abstract

My dissertation focuses on retail trading and household finance. The abstracts of the three chapters are as follows: In Chapter 1, I use days on which social media platform connectivity is exogenously interrupted to study social media’s impact on retail trading. It provides evidence consistent with social media platforms spreading fanatical optimism rather than rational beliefs. On “outage” days, social media-discussed stocks experience an increase in retail trading volume concentrated in selling. Social media-discussed stocks experience a price decline that reverses over the subsequent day. These results can be explained by a theoretical model of fanatical optimism and are robust to a battery of alternative explanations. The paper’s findings highlight the important role of social media on retail traders’ belief formation and its stock market consequences. In Chapter 2, a joint work with Divij Kohli, we study credit card fraud. Credit card fraud is the most common type of identity fraud in the U.S. with a cost of over $11.64 billion. In 2014, the U.S. government pushed for widespread adoption of more secure chip-enabled credit cards to safeguard consumers from financial fraud and improve confidence in the marketplace. We study the effects of this technological innovation in payment security on household credit outcomes. Using a matched sample staggered difference-in-differences event study, we show that before this intervention fraud exposed consumers faced decline in access to credit. Post this innovation, consumers see greater credit availability. We then examine consumer behavior associated with exposure to fraud and find that consumers reduce their credit demand and face increased financial distress. These findings do not change following the innovation. Heterogeneity analysis shows that low credit score households are more likely to have higher decline in credit demand and increased financial distress. Our findings suggest that persistent consumer distrust underscores the need for further policy innovations, such as one-time passcodes for credit card transactions and sufficient financial education to consumers. In Chapter 3, a joint work with Corbin Fox, we study how the outcomes of public predictions influence user behavior and reputation in online retail investor communities. Using a novel dataset of over 13,000 “Ban Bets” submitted to Reddit’s WallStreetBets, we analyze how users respond after making high-visibility forecasts tied to a self-imposed five-day ban if incorrect. We track engagement (comments), attention (upvotes), and reputation (upvotes per comment) for 14 days before and after each user’s first bet. We find that users who make correct predictions increase their activity and visibility, while incorrect users disengage and suffer reputational losses. Winners receive a short-term boost in reputation (+47%), whereas losers experience a persistent decline (-29%). These dynamics are not driven by selection or moderation but reflect community-level responses to prediction accuracy. Our results show that correctness carries measurable social value in informal financial spaces. Even in meme-driven environments, users are held accountable for public forecasts through peer feedback mechanisms, highlighting the role of informal reputational incentives in shaping participation and influence in digital markets.

Graduation Semester

2025-05

Type of Resource

Thesis

Handle URL

https://hdl.handle.net/2142/129561

Copyright and License Information

© 2025 Justin Mohr

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